Hiring employees in South Dakota: the 2026 compliance checklist for employers and recruiters

As of October 2026, an employer hiring in South Dakota has to register with the Department of Labor and Regulation's (DLR) Reemployment Assistance Tax Unit, decide whether to carry workers' compensation (state law does not force it, but an uninsured employer can be sued by an injured worker), collect the federal W-4 and Form I-9, and report each hire to the New Hire Reporting Center within 20 days of the first day of work. South Dakota has no state income tax, so there is no state withholding form, and no statute on pay transparency, salary history, ban-the-box or credit checks for private employers. There is no E-Verify mandate after House Bill 1209 died in March 2026 and no AI hiring law, and recording needs only one party's consent.

This page is the South Dakota hub: one table with every item and its official source, then a short section on each. Where we already have a full guide to an item, the section summarizes it and links there.

The South Dakota hiring checklist at a glance

What must be in place before the first South Dakota hire?

A reemployment assistance (unemployment insurance) account. The DLR's registration page says "All newly established businesses are required to register with the Reemployment Assistance Tax Unit," online or on Form 1. Under SDCL 61-1-4, an employer owes the tax once it pays "one thousand five hundred dollars or more" in wages in a calendar quarter, or has at least one person in employment in "twenty different calendar weeks," in the current or preceding year. The DLR's RA Tax FAQ lists the first-year rate for a new employer as 1.20% (6.00% in construction) plus a 0.55% investment fee.

Then a decision on workers' compensation. The DLR states plainly that "There is no law in South Dakota requiring any employer to carry workers' compensation insurance," while calling coverage "highly recommended." Going without it is costly: under SDCL 62-5-7 an employer that has not secured coverage "shall be deemed to have elected not to operate" under the law, and SDCL 62-3-11 lets the injured employee sue at law or claim benefits "plus twice the amount of other compensation allowable." The DLR's coverage page lists the exceptions, including farm labor and most part-time domestic workers. The federal layer (an EIN, Form W-4 and Form I-9 by the third business day) applies on top.

Does a staffing or recruiting agency need a South Dakota license?

No. The Legislature's code site shows the private employment agency chapter, SDCL 60-6A, as "[Repealed by SL 1981, ch 367, §§ 1 to 4]," and nothing has replaced it. What staffing firms do face is sales tax: South Dakota taxes most services under SDCL 10-45-4, and the Department of Revenue's PEO tax fact says a temporary help agency "is required to pay sales tax on all fees charged to the client" with no deduction for wages paid. Approved professional employer organizations may deduct payroll costs instead. Our guide to South Dakota staffing agency rules covers the repeal, the tax and PEO approval.

What must a South Dakota job posting include, and can you ask about pay history?

Nothing state-specific. As of October 2026 we found no South Dakota statute that requires pay ranges in job postings or bars questions about salary history; the only pay rule in the labor title is SDCL 60-12-15, which bars paying one sex less than the other "for comparable work." South Dakota does not appear in our trackers of pay transparency laws by state or salary history ban states. A posting for a remote role open to candidates in Colorado, California, Illinois, Minnesota or New York can still pick up those states' posting rules.

When can you ask about criminal history or run a credit check?

Any time, as far as state law goes. South Dakota has no ban-the-box law for private employers: nothing in the labor title, SDCL Title 60, restricts criminal history questions, and the Human Relations Act's protected traits in SDCL 20-13-10 do not include a record. Federal rules still apply: the EEOC's arrest and conviction guidance under Title VII and the FCRA background check process when an outside agency runs the check.

We found no South Dakota statute limiting employment credit checks either, so the FCRA's disclosure, authorization and adverse-action steps are the rules to follow; see our credit check laws guide for the states that have one. The one screening limit in Title 60 is genetic: SDCL 60-2-20 makes it an unlawful employment practice "to seek to obtain, to obtain, or to use genetic information" of a prospective employee, with narrow law enforcement exceptions, and lets the applicant sue for damages and attorney fees.

Can you record or transcribe a job interview in South Dakota?

Yes, as a participant. SDCL 23A-35A-20 makes it a Class 5 felony for someone who is not "a sender or receiver of a communication" to record it "without the consent of either a sender or receiver," or for someone who is not "a person present during a conversation" to record it without a party's consent. An interviewer is a party, so recording their own call is lawful. A Class 5 felony carries up to five years and a $10,000 fine under SDCL 22-6-1. For on-site interviews, SDCL 22-21-1 separately bars installing a recording device in a private place without the consent of the people entitled to privacy there. See South Dakota recording consent law for interviews and recording calls across state lines for candidates in all-party states.

Does South Dakota regulate AI in hiring?

No. As of October 2026 no South Dakota statute addresses employers' use of AI in hiring, and none of the 2026 bills that named AI or chatbots was aimed at hiring; even a bill for an AI study task force, House Bill 1125, failed on the House floor 26 to 43. An AI screen is still covered by the Human Relations Act's ban on discrimination "with respect to application, hiring" in SDCL 20-13-10 and by federal law; see our state-by-state AI hiring summary.

Can you drug test applicants in South Dakota?

Yes, with a medical cannabis caveat. South Dakota has no general drug-testing statute for private employers, and SDCL 34-20G-24, part of the medical cannabis law, says no employer is prohibited from enforcing "a drug-free workplace policy, which may include a drug testing program," or "acting with respect to an applicant or employee under the policy." But SDCL 34-20G-22 says a registered qualifying patient must get the same rights in drug testing by an employer as someone "solely prescribed a pharmaceutical medication," and expressly allows refusing to hire on a positive cannabis test only for a "safety-sensitive job," one an employer reasonably believes could cause illness, injury, death or serious property damage. Federal obligations, such as DOT testing, override both (SDCL 34-20G-23). Get advice before rejecting a registered patient for a job that is not safety-sensitive; our drug testing laws guide compares other states.

Does South Dakota require E-Verify?

No. House Bill 1209 passed both chambers in 2026 in different forms, and on March 11, 2026 the Senate voted 18 to 15 not to adopt the conference committee report, which would have covered employers with more than 25 employees; a motion to reconsider failed 15 to 19. Private employers remain under federal rules only, and federal contracts with the FAR E-Verify clause still require it. See E-Verify requirements in South Dakota for the bill's versions and E-Verify requirements by state.

Which state withholding form does a new hire complete?

None. The Department of Revenue says South Dakota "does not impose a state income tax," so the federal Form W-4 is the only withholding form a South Dakota new hire completes. A remote employee who lives and works in another state may still owe that state's income tax, so check where the person actually works.

Which notices must a new South Dakota employee get at hire?

• No state notice at hire. We found no South Dakota statute requiring a written pay or job notice at hire. Title 60 requires wages to be paid at least monthly or on "regular agreed pay days designated in advance" under SDCL 60-11-9, so tell new hires the payday.
• Two workplace postings. The DLR says "South Dakota law requires only two workplace postings": the reemployment assistance notice, which must also be given to each worker individually at separation, and a job safety posting under the workers' compensation law, in any format. Federal posters apply too.
• Non-compete terms, if any. SDCL 53-9-11 allows an employee to agree, at hire or later, not to compete or solicit customers for up to two years within a specified area. Under SDCL 53-9-11.2, such clauses are voidable for listed health practitioners (physicians, nurses, pharmacists, therapists and others) in contracts from July 1, 2023, and for community services providers in contracts from July 1, 2026.

How do you report a new hire in South Dakota?

To the New Hire Reporting Center run by the DLR in Aberdeen. SDCL 25-7A-3.3 requires every employer to report each new hire "no later than twenty days after the date the employer hires the employee," or in two monthly electronic transmissions 12 to 16 days apart, with the employee's name, address and Social Security number and the employer's name, address and federal identification number. The DLR's reporting requirements add the date of hire, "date first performed services for pay," and say rehires who "have not been paid for the past 30 days" must be reported again. File online, or by mail or fax using the state form or the W-4. Temporary agencies report the workers they pay under their own FEIN; PEOs must use the client's. The DLR says intentional failure is a petty offense, with a $25 penalty per violation or up to $500 per employee for a conspiracy not to report. Independent contractors are not reported.

The South Dakota hiring steps in order

1. Before the first hire: register with the Reemployment Assistance Tax Unit, and decide on workers' compensation coverage. Temporary staffing firms also collect sales tax on their fees.
2. Posting: no South Dakota pay range rule, but check the rules of any other state where candidates for a remote role live.
3. Screening: criminal history and credit questions are legal under state law; follow EEOC guidance and the FCRA, and leave genetic information out entirely.
4. Interview: a participant may record, but get consent when the candidate is in an all-party state, and never leave a device recording in a private place.
5. Offer: drug test under a written drug-free workplace policy, with care for registered medical cannabis patients outside safety-sensitive jobs; check any non-compete against the practitioner rules.
6. First day: Form I-9 and the federal W-4; E-Verify only where a federal contract requires it.
7. Within 20 days of the first day of paid work: report the hire to the New Hire Reporting Center, then include the wages in the quarterly reemployment assistance report.

Hiring in more than one state? The same checklist is available for Minnesota, Colorado, South Carolina, Utah, Vermont, West Virginia, Wisconsin and Wyoming.